What is ARPU
ARPU stands for Average Revenue Per User, which is known as the total revenue per subscriber.
How ARPU works
Who Needs It?
ARPU is generally used by Marketing, Communications, Digital Media and Networking Companies.
Total Revenue divided by the number of subscribers, ARPU is used for financial analysis in order to measure success.
Mostly important for telecommunications and dotcom companies, tracking ARPU allows a way to show revenue increases or decreases per promotional (and additional) services offered.
ARPU Best Practices
Since the equation is pretty simple (Total Revenue divided by # of Subscribers), it is up to the company to determine an accurate number of subscribers in one time period. The number of subscribers often varies.
Showing ARPU is a great way to show a company’s success when comparing that company to another. If the services and prices are similar but one company’s ARPU is higher, you can bet your bottom dollar that the company is making more money.
Investors & Promotions
ARPU is also a great way to show stock holders and investors that a company is profitable. It can also provide data as to which promotions are profitable via the increase or decrease of ARPU.